Tesla Case Essay

Furthermore there were also concerns that alternative fuel cars do not have the distance capacity that the ICC cars do, nor is the re-charge or re-fuel station infrastructure been set up. Manufacturers such as Ford / GM / BMW were still focused on growing the traditional market Of ICC cars. They did not invest heavily into developing alternative fuel cars or technology that would give them a first mover’s advantage. Traditional manufacturers did not see the potential of a blue ocean strategy; they did not realize that they could create a whole new market for electric cars.

Electric vehicle technology was the best alternative fuel to petroleum or gas. During 201 1, the average household had more than three vehicles, not many if at all had a hybrid or EVE car. This was in large part due to the fact that EVE technology was so new / expensive and UN- proven. Furthermore manufactures needed to develop the battery technology; this was by far the most expensive part of the EVE. The Lie-loon battery was introduced in the ass’s and has been the adopted platform for all EVE manufacturers; there have been talks of replacement technology.

However to date the Lie-loon battery is still the standard choice with new variations and enhancements being released over time. Car manufacturers that entered into the alternate car power industry used their existing facilities and employees to manufacturer the new hybrid / EVE cars. They would use their existing assembly lines and modify the robots and machinery to perform the new tasks. Manufacturers mainly kept the existing design of some popular model and modified it to be an EVE car, no clean sheet design was developed for the masses with the exception of the Ionians Leaf and Tests.

This gave Tests and Ionians an advantage over the other manufacturers as they did not need to org around the existing design and compensate for how and where the parts will fit. A good example of this is the placement of the battery and drive train by Tests, this gave the Tests a lower center of gravity thus enhancing the overall performance / cargo space of the car. There were two main obstacles facing the alternate power car industry, first the uncertainty of the longevity, performance, resale and most importantly safety.

Consumers where not confident in the new technology, these vehicles require a significant up-front investment and not know what it will be worth or perform was a roadblock or many potential buyers. Second as mentioned above was “range” many consumer where not comfortable with a limited range capacity of these vehicles, especially due to the lack of charging stations and the time required for a charge. However government back rebates and perks help consumers open up to the idea of an EVE vehicle. In your opinion, does Tests have a sustainable competitive advantage?

Why or Why not? Yes – Tests has a competitive advantage for a few key reasons. Sales / Service – Tests surpassed the traditional business model of going through a dealer channel to market and sell its cars. Tests felt that dealers would take away from the experience of buying an EVE vehicle; they’ll lack the technical know and have a conflict of interest as they sell the ICC vehicles. This allows Tests to deliver a unique customer experience, one that is more consultative and differs from the traditional perception of car sales.

Consumers visit a Tests location and request the vehicle of their choice with the desired configuration; this custom tailored approach allows Tests to have a low inventory on hand. Tests customers had numerous service options, go to a Tests service center, call the Tests Rangers or the Tests valet exchange. Furthermore many of the service issues could be done through a software up-date, thus contributing further the uniqueness of the Tests experience. Market Approach – I believe that Teasel’s approach into the market gave it a considerable competitive advantage, it adopted the top down entry approach.

Tests introduced models that would compete with the likes of BMW / Audio / Mercedes in the upper class luxury segment. It did not introduce models that would compete on price against other low end models; this was also the segment that many of the other manufacturers choose to begin their entry into the EVE vehicle market. Manufacturing – Tests does its own manufacturing in house, this gives Tests greater control over production and quality. A keep advantage for them was their ability to acquire the equipment necessary for production at a fraction of the cost of traditional auto manufacturers.

Do to the instability of the auto manufacturing market many of the traditional makers where closing down planets thus making equipment available for purchase at a much discounted price. Tests also decided not to manufacture in Detroit (the home of many legacy auto makers) instead it opened up its facility in the Silicon Valley, this not only gave Tests access to a read talent pool of engineers but was also a central point for distribution in North America.

Tests manufactured a high end quality product that competed with the likes of BMW / Audio but would also compete with the like of Ferreira and Porches for speed and handling. By combining luxury and performance in a revolutionary technology gave Tests the competitive advantage. Furthermore through it partnership with Toyota and Daimler, Tests was able to generate additional sources of income by producing drive trains for them. Tests low priced high performance output battery gave them a huge advantage, Tests car’s could drive up to km before needed to be charged.

Has Tests departed from established industry practices? Yes – Tests has departed from established industry’ practices, it was the first auto maker to bypass the dealer network and go to market direct selling directly to consumers. Tests also does the servicing of the EVE cars themselves, not employing high cost service labor or infrastructure. A major source of income for automotive makers is the parts and service, Tests however does not feel that parts or service should be considered a source of revenue.

Unlike every other dealer / automaker Tests does not charge for service or repairs with the exception of an annual warranty fee. Tests cars also have thousands of fewer moving parts than a traditional car no internal combustion engine, no transmission, no mufflers or catalytic converters thereby lowering the chances of things breaking down or wearing out. Thanks to regenerative braking, even brake pads will last longer on Model S than on other cars. Tests does not keep an abundance of inventory on hand, its retail locations, which at most will have a couple of cars on site, serve as educational forums for customers.

Teasel’s sales staff our not compensated on commissions, so they do not need to do pressure sales and also have more time to explain and demo the Tests product. This approach as also limited the amount of money Tests has in excess inventory, thus giving them more cash flow to work with. Tests also broke away from the traditional approach of outsourcing manufacturing; it in turn opened up its own facility located in Silicon Valley. This was a drastic move; Tests would now control its own manufacturing operation thus allowing for tighter quality control and ability o react faster to market changes or demand.

What short-term objectives are required for Tests to survive? In the short term Tests should be focused on creating more awareness of the product and satisfying consumer concerns. Tests has a high price tag, many consumers will shy away from Tests due to sticker shock, Tests needs to provide consumers with a ROI calculator that allows them to determine their breakable point had they have purchased an ICC car. Tests needs to work with the local governments to develop more electric car charging stations, with more of them consumers will not have longevity anxiety.